Bank of Baroda to provide loans up to Rs 12,000 crore to MSMEs under credit guarantee program

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The ECLGS was the second largest component of the comprehensive over 20 lakh crore package announced by the government for the coronavirus-hit economy.

The state-run Bank of Baroda said on Saturday it could offer loans up to Rs 12,000 crore to MSMEs under the 3 rupee lakh crore announced by government.

Last week, Finance Minister Nirmala Sitharaman announced a 100% credit guarantee program worth Rs 3 lakh crore to support medium, small and micro enterprises (MSMEs) which have been affected by the crisis. coronaviruses.

All existing MSME borrowers with outstanding credit of up to Rs 25 crore as of February 29 and with annual turnover of up to Rs 100 crore would be eligible for funding under the program.

“In our case, this particular portfolio amounts to Rs 58,000 crore. So 20% of that would be around Rs 10,000 crore to Rs 12,000 crore. This we can make available to our MSME clients in the coming times under the government guaranteed scheme, ”the bank’s managing director and CEO, Sanjiv Chadha, told reporters on a video conference.

The ECLGS was the second largest component of the comprehensive over 20 lakh crore package announced by the government for the coronavirus-hit economy.

Under the program, 100% guarantee coverage will be provided by the National Credit Guarantee Trustee Company (NCGTC) for additional funding of up to Rs 3 lakh crore to eligible MSMEs and interested borrowers of the Mudra program, under in the form of a secured emergency line of credit. (GECL).

The amount of GECL funding to eligible MSME borrowers, either in the form of additional term loans for working capital (in the case of banks and financial institutions) or additional term loans (in the case of NBFCs), would represent up to 20 percent of their total amount. outstanding credit of up to Rs 25 crore as of February 29, 2020.

Chadha further said that as part of the COVID-19 emergency line of credit launched in March, the bank has so far sanctioned loans of Rs 3,000 crore and disbursed Rs 1,500 crore to MSMEs.

Nearly 60 to 70 percent of the bank’s borrowers have taken advantage of the three-month moratorium on term loan repayments announced by the RBI in March.

“In terms of people benefiting from the moratorium, it was around 60-70%, although 90% or more would have been eligible for it,” he said.

State Bank of India Chairman Rajnish Kumar on Friday said nearly 20% of the bank’s borrowers invoked a moratorium on the repayment of term loan maturities.

On Friday, the RBI extended the moratorium for another three months until August 31, 2020.

Chadha sees the number of people benefiting from the moratorium decrease as economic activities resume. ???

The bank has not offered a moratorium to the NBFCs but is now considering granting them the facility on a case-by-case basis, he said.

“This (moratorium on NBFCs) is something that we are considering. We are clear that regardless of the category of borrower, whether it is an NBFC, an industrial borrower, an MSME or a home loan, you have to meet very real requirements to this stage, ”he said.

“Therefore, when it comes to our NBFC borrowers, especially the smaller ones where the dependence on certain banks would be a bit higher and where access to other sources of funding is not not available, that (offering a moratorium) becomes a simpler decision, ”said Chadha. .

According to him, the bank is currently well capitalized but could seek to raise level 1 capital to constitute its capital cushion.

“In terms of the stock market, now is not the best time. But we could be in the market for potentially Tier 1 capital over the next couple of months, ”he added.

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